Cattle Futures Reverse Course, End Winning Streak

By Benjamin Parkin Features Dow Jones Newswires

Cattle futures turned sharply lower late in Thursday's session, ending several consecutive days of gains.

Continue Reading Below

The futures market has rallied since the first half of January as higher physical cattle prices and weather disruptions encouraged optimistic bets among traders. But the market tumbled sharply in around the final hour of Thursday's session, erasing a portion of the recent rally.

The turnaround came as traders interpreted some chart signals to suggest that prices had hit a temporary ceiling, analysts said.

"Technically we were getting a little exhausted," said Trey Warnock at Amarillo Brokerage in Texas. "We were getting pretty overbought short term."

February-dated live cattle futures at the Chicago Mercantile Exchange fell 2.4% to $1.22475 a pound, approaching their lower limit for the session. Prices had previously traded at the highest point in over two months.

Futures traders have anticipated higher cash, or physical, cattle prices again this week, but sales were limited as of Thursday's session. Some cattle traded for $123 per 100 pounds in Kansas on Tuesday, steady with a week earlier. Observers said packers were mostly bidding around $122, while feedyards were asking for around $126 to $128.

Continue Reading Below

Wholesale beef prices have risen through the week, and were higher again at midday Thursday. The U.S. Department of Agriculture said on Wednesday that stocks of frozen beef fell 14% in December from a year earlier. Strong global and domestic demand helped offset record red meat production last year.

Hog futures also turned lower. Cash hog and pork prices got a boost earlier this week after a snowstorm interrupted slaughter operations in parts of the central U.S. That supported the futures market too, though analysts said that momentum waned on Thursday.

CME February lean hog futures fell 0.6% to 72.475 cents a pound, with the more-active April contract falling 2.5%.

Write to Benjamin Parkin at benjamin.parkin@wsj.com

(END) Dow Jones Newswires

January 25, 2018 15:24 ET (20:24 GMT)